British energy giant
) has sealed the $2.4 billion deal with
Marathon Petroleum Corporation
) relating to the sale of its refinery in the Texas City, Texas.
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The sold refinery has a 475,000 barrel per day capacity. In
addition, it comprises a 1,040 megawatt cogeneration facility,
four marketing terminals situated in the Southeast, retail
marketing contract assignments for about 1,200 branded sites
representing around 61,000 barrels per day (bpd) of gasoline
sales, three operating intrastate natural gas liquids pipelines
starting at the refinery and a 50,000 bpd share of BP's Colonial
Pipeline Company shipper history.
The payment consists of $0.6 billion in cash, while the
hydrocarbon inventory is valued at $1.1 billion and an earn-out
arrangement of $0.7 billion is payable over six years, based on
certain conditions. The refinery has been renamed as the
Galveston Bay refinery by the buyer.
Even before the Macondo accident, the disposed facility witnessed
a deadly explosion in March 2005. The incident took the lives of
15 workers and injured as many as 170, raising a safety alarm
across BP's U.S. operations. Following this, the company shut
down the refinery for about two years and incurred $1 billion in
compensations to restore the unit. Again in 2007, BP announced
that it spent $1.6 billion to recompense the sufferers.
In recent times, BP has divested a number of non-strategic assets
that include the Gulf of Mexico (GoM) oil and gas assets to
Plains Exploration & Production Co.
) for $5.55 billion. It has also disposed the Carson refinery in
) for $2.25 billion. This divestiture is expected to close this
year. However, the company intends to retain three core U.S.
sites - Whiting in Indiana, Cherry Point in Washington and Toledo
These negotiations are in sync with BP's $38 billion divestment
program that sees the British major getting rid of its mature,
non-core upstream assets to create a portfolio with strong growth
potential operating from a smaller base by 2013. The divestitures
also help the company to refocus on its U.S. fuels portfolio.
BP holds a Zacks Rank #3, which is equivalent to a short-term